First, showing that an organization decreases its volatility and increases its financial stability. Increased stability ensures an organizations longevity through unsure financial times. 

Second, organizations with diversified revenues are often more connected to the community they serve, more efficiently meeting local needs and allowing for better mission performance. Finally, organizations with diverse revenue sources have more autonomy, allowing them to pursue programs or events that better align with their mission. 

How can nonprofits diversify funding for greater community impact? To work towards diversification in revenue, it is recommended that organizations should break down their current funding structure, strategize possible revenue diversification, and implement their finalized plan.     

Breaking down current funding sources

Because implementing a diverse revenue portfolio can be difficult, employee understanding is paramount. Begin with asking: 

• “Where do we receive a majority of our funding from?”
• “Where could we strengthen other funding sources?” 

Research should include backdated funding logs, going back at least five years. This step ensures that all leaders are knowledgeable about where their current and past funds originated. Once all necessary financial information has been gathered, convene with the treasurer, and finance committee and discuss their findings. This group will discuss how the revenue sources might have affected their organization in the past and what changes they can implement moving forward to best utilize their current resources to capture a more diverse revenue portfolio. Note periods of organizational growth and discuss how these were achieved. Diversifying revenue sources does not require the organization to abandon current funding sources, instead asking staff to divide effort between all funding sources.

Strategize possible revenue diversification

Next, begin to strategize what revenue diversification will look like. This discussion can include questions such as: 

• What new revenue sources should we explore?
• Why have we not explored them before?
• What barriers might we run into?
• Who will be responsible for managing this revenue source?
• Do they have the capacity to take this on?

Revenue diversification may require increased staff and administrative support. If all parties are aware of this prior to diversification, then this does not have to be a setback. Through constant communication, a suitable plan that allows staff members to expand revenue without becoming overworked in their position is possible. Strategies for revenue diversification might utilize new funding sources or might rely on lapsed donor groups. Focusing on a healthy balance between individual donors, corporate donors, and grants ensures that pressure to meet funding goals are spread equally between staff members and their sector.

Implement revenue diversification

Implementation will be the most strenuous part of the diversification process. With a new structure being put into place, most staff jobs will experience a slight shift as they adjust to a new pillar and changing job responsibilities. The plan formulated by senior leadership and the board will not be perfect. Throughout this process it is vital to stay in constant communication with the teams being affected by this change, specifically the people working on the new revenue sources. Understanding that this process will be difficult and likely take two to three years to fully implement and see positive change is necessary. 

As mission drift is a general fear that deters organizations away from diversifying their revenue sources. To ensure alignment with mission, leadership can meet quarterly to discuss what lower-level staff has shared with them through this process. This will ensure that strategy and implementation are staying true to the process outlined. Both leadership and staff can continuously ask if financial strategies align with the mission or not. If not, the entire group can evaluate together what does not align and how they can refocus on the mission moving forward. This process will come with setbacks that might deter the organization. However, with an outlined goal and minor adjustments, as needed, the organization should see progress by the end of five years. 

Creating a diverse revenue allows organization to connect to communities in different ways. With diversified partnerships, opportunities to connect and engage with new partners allows organizations to explore new programmatic opportunities. Additionally, it decreases the organizations volatility, guaranteeing their future, even during times of national financial uncertainty. 

Megan Haggerty is a 2025 graduate of the Masters of Nonprofit Leadership and Management program at Arizona State University. She received her undergraduate degree in Public Policy and Nonprofit Management from The Ohio State University. Megan is currently working as the development coordinator for the National Kidney Foundation serving Central Ohio and is excited to continue using her education in her everyday life! 

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